Many people have heard of reverse mortgages, but most do not understand the specifics of how these loans work. If you are interested in learning about this kind of loan, you might want to talk to your lender about them. Asking questions can help you understand how these loans work, which might help you determine if you want to apply for a reverse mortgage. Here are a few things to know about your responsibilities when you have a reverse mortgage.
A Reverse Mortgage Pays You Cash
A reverse mortgage, in a sense, is like a home equity loan. You can use the equity you have built up in your house to borrow from, but there is one significant difference. With a home equity loan, you must make payments on the money you borrow. On a reverse loan, you do not make payments on the money you borrow. Instead, you simply receive a lump-sum payment from the equity in your house, and you can use the proceeds to pay your bills and anything else.
You Must Pay Your Regular Expenses
The one responsibility you have when taking a reverse mortgage is paying for your regular expenses. When you borrow money against your home's equity through this type of loan, you must continue paying your monthly expenses. You must pay your utilities and medical bills, and you must pay your homeowner's insurance and property taxes. If you fall behind on your property taxes or homeowner's insurance, you may have to pay back the reverse loan. These are some of the requirements you must meet for reverse mortgages.
You Must Repay the Loan Under Certain Conditions
The main requirements of reverse mortgages are paying your insurance and taxes, but you must also repay your reverse mortgage if one of the following things happen.
The first is if you move out of the house. If you must move out of the house, your lender will require the repayment of the loan. Therefore, if you move to a nursing home or assisted living facility, you must repay the loan. Secondly, you must repay it if you sell your house. If you decide to sell your house, the reverse mortgage lender will require the repayment of the funds. The third situation in which you must repay the loan is when you die. When you die, your lender gets repaid when your family sells the home.
If you have questions about how these reverse mortgage loans work, talk to your lender today.Share